Tuesday, June 1, 2010

Subsidy cuts - shouldn't the corporate sector sacrifice too?

Subsidy cuts are inevitable. Let's accept that. Eventually they have to go. The Government cannot go on subsidising everything under the sun. It's going to impact the country's economy, although I doubt that it's going to be as dramatic as Minister in the Prime Minister's Department and the CEO of the Performance Management and Delivery Unit(Pemandu), Datuk Idris Jala put it.

I don't think any Malaysian in his or her right mind wants to continue to see Singaporeans travelling to Johor Baru to fill subsidised petrol or to shop simply because it's cheaper. Similarly, we don't want to see the Thais or Malaysians up north smuggling petrol and subsidised goods into Thailand to make quick profits. Every Malaysian would agree that this should stop.

It is a sin to allow foreigners to benefit from this at the expense of the country's economic well-being.

It is a fact that the Government of today led by Datuk Seri Mohd Najib Tun Razak is saddled by the deficit accumulated over the years. It's important that the deficit which now stands at almost RM300 billion is reduced or better, cleared, so that our vision to become an industrialised and a high income nation by 2020 can be realised.

However, my concern is the poor. The Government has to device a strategy to ensure that the hardcore poor and the vulnerable group do not end up poorer. While we vigorously pursue the developed nation status, we should not allow the disparity between the rich and the poor to widen. Poverty does not sustain stability and hunger does not sustain democracy.

The Government must be seen to act. The poor must be protected at all costs. One way is to introduce minimum wage. We have been arguing about this for a long time, but we are not getting anywhere.

By paying low wages, the rich employers are in fact, being subsidised. There are a few plantation companies in Malaysia which choose not to become members of the Malaysian Agricultural Producers Association(MAPA) so that they do not have to subscribe to the National Union of Plantation Workers (NUPW) basic monthly salary requirement. This is an outright exploitation of workers.

There are also discrepancies in other areas. One which quickly comes to mind is the energy sector. If the Government is considering a tariff hike, then Tenaga Nasional Berhad must re-negotiate its contracts with the Independent Power Producers (IPPs). Currently, power produced by the IPPs are being forced down TNB's throat, although it doesn't really need it.

TNB's current reserve power margin stands at 44.7 per cent. It may require about 20 per cent reserve for emergencies, but the remaining 25 per cent is left idle. This is absolute waste of money.

Granted that there is a contract between TNB and the IPPs requiring the former to buy the power produced by the latter, irrespective of the need. But all contracts can be re-negotiated. Even at the absence of a clause in the contract which allows re-negotiation, there is a provision in the Law of Contract which allows it.

I am sure, after many years, the IPPs have recouped their investments and have even made a lot of profit. As such, during crunch time, the IPPs should demonstrate good corporate citizenry by agreeing to re-negotiate their contracts. This is national service, so to speak.

For the country's sake, the IPPs should be flexible. If the country's financial position takes a dip, they too will suffer.

How do we explain to the rakyat that TNB is making the rich IPPs even richer by buying power that it does not need? How do we explain to the rakyat that they have to pay higher electricity tariff while at the same time, TNB has reserve power going to waste. Does it make economic sense?

If the Government is asking the rakyat to tighten their belts, it should do the same with the corporate sector.

My argument also extends to the highway toll concessionaires, while they make billions of ringgit, they insist on raising the toll each time the rates are up for revision. They insist on doing so even during a crisis.

During difficult times, all including the corporate sector, must sacrifice. The rakyat alone should not bear the burden. WE are after all the nation.


Anonymous said...

subsidies are never from borrowed money. basically, from tax, non-tax revenues and national wealth.

my fundamental question is

who are our national debt creditors?


Anonymous said...

i 100% agreed with your point of view and suggestion. but the question here is, do the government serious to consider it? i dont think so, why? because they and their cronies are the share holder of these big coporation. they are only interested to make them rich only. for them - go to hell with the rakyat

ex-capt rkpt

Anonymous said...

that they might not interested in paying is worse than i thought

*biting nails*